Dow Jones Industrial Average (DJIA) is an index which tracks the performance of 30 large publicly traded companies in the United States. It's also known as Dow Jones or Dow 30.
The origins of Dow Jones Industrial Average go all the way back to May 26, 1896, when Charles Dow published his first Wall Street stock average in Customer's Afternoon Letter. At that time, it included 12 industrial stocks. Over the years, he continued adding to the list until it reached a total of 30 industrial companies and became known as Dow Jones Industrial Average in 1916.
Today, DJIA is one of the most closely watched stock market indexes in the world as it represents one-fifth of U.S. equity market capitalization and covers several different industry sectors including agriculture, transportation, utilities and finance. This allows investors to monitor daily fluctuations in this index and get a good insight into general market sentiment for a particular trading day or week.
Dow Jones Industrial Average is not a weighted index which means that all 30 components are given equal weighting irrespective of their size or value.
The idea behind the DJIA is also to provide an easy-to-understand gauge of how well or poorly a certain sector of the economy is doing, based not on speculation but on hard data about how much 30 companies are actually worth.
